Disney and DIRECTV Reach Agreement After Two-Week Dispute

This is an excerpt from Parks Associates Streaming Video Tracker.

Disney and DIRECTV recently resolved a difficult two-week blackout that left millions of DIRECTV customers without access to key Disney-owned channels, including ESPN and ABC. The blackout, which coincided with several major sporting events, arose from disagreements over carriage fees and channel bundling. DIRECTV filed a complaint with the FCC, accusing Disney of anticompetitive practices, including bundling less popular channels with ESPN and demanding immunity from legal action. After negotiations, the companies reached a deal that allows DIRECTV to offer genre-specific channel bundles, a significant shift from traditional packages that tend to have more channels than most people use and even want. Additionally, Disney's streaming services, including ESPN+, will be included in certain DIRECTV packages.

Market Impact

Disney and DIRECTV's dispute is a clear example of increasing tensions between traditional cable and satellite providers and content owners, as consumers increasingly want more control over what they watch. For years, companies like Disney bundled popular channels like ESPN with less desirable ones, forcing distributors to include them in basic packages. But as more people turn to streaming and have grown accustomed to on-demand content, this old model is being pushed aside.

Parks Associates has been tracking the decline of pay TV for years. While a sizeable proportion of households still value the traditional pay-TV model, cable companies have been hard at work to develop strategies that keep customers paying for at least some level of service – such as offering smaller channel packages.

DIRECTV’s ability to negotiate smaller, genre-specific bundles shows that this shift is gaining momentum and could lead to bigger changes in how TV content is packaged and sold.

The new deal’s emphasis on smaller bundles, instead of large (and expensive) traditional packages, could set a new standard for future negotiations across the industry. For content providers like Disney, it’s a big shift from their usual strategy of bundling less popular channels with top ones to increase profits. If other distributors follow DIRECTV’s lead, it puts the revenue models that rely on this bundling strategy at risk. To adapt, content providers seek more revenue from direct-to-consumer streaming services or ad-supported models to make up for losses from traditional pay TV.

The agreement also sheds light on the steady decline of traditional cable bundles and clearly shows that the unbundling of content is happening now. Companies that fail to adapt to the growing demand for flexibility and choice risk being left behind. Media companies are feeling the pressure to improve their streaming services, which are quickly becoming their primary source of income. In this context, partnerships between traditional TV providers and streaming platforms could be a key factor in staying competitive.

Parks Associates Streaming Video Tracker includes access to a platform and monthly insights into the 300+ N. American streaming services, providing details on current players, new entrants, and trends in the market.        

Services tracked include subscription, transactional, ad-supported, and hybrid models that deliver professionally created content to consumers on internet-connected devices.

This research service provides extensive profiling for 400+ streaming video services in the US and Canada. It also estimates subscribers, viewers, and transactional users, including those that do not publicly release customer figures. Data on the platform is updated quarterly and monthly updates are distributed providing insight into the latest news and market developments.

For access to this research and more, contact Nick Groetken or any of the team at Parks Associates . Email info@parksassociates.com or visit www.parksassociates.com